AICD welcomes Commonwealth review of directors liabilities

The Australian Institute of Company Directors (AICD) today welcomed the Federal Government’s planned audit of Commonwealth laws for provisions imposing personal liability on company directors.

AICD believes that in announcing this audit, Senator Nick Sherry and the Ministerial Council for Corporations (MINCO) have acknowledged the importance of this area of corporations’ law reform to Australia’s economy.

Considering the announcement following the referral of this issue to MINCO in December 2008, AICD also believes this indicates the Commonwealth Government remains committed to working towards legislation that is fair, consistent and principled.

Chief Executive Officer of AICD, Mr John Colvin, said while he was pleased with today’s progress, it was just one step of many required in this area.

“There are more than 600 state laws that impose personal liability on directors. We hope the findings of this audit generate the momentum for a similar audit of state legislation,” Mr Colvin said.

AICD noted that the COAG principles (against which the audit will be conducted) – importantly – demonstrate that this audit is not about easing standards, or aiding those directors guilty of misconduct.

“We are already seeing directors under more scrutiny in light of current economic conditions, and in some cases this will be justified. Where directors are fulfilling their duties diligently and ethically, however, they should be entitled to greater certainty of their legal position or liability exposure,” said Mr Colvin.

AICD once again noted that the audit will only examine criminal liability. AICD has previously advocated a similar review of civil liability.

For media inquiries, please contact:
Juliet Chandler, Communications Advisor
(02) 8248 6624 or 0412 580 402

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Australian Institute of Company Directors (AICD) provides education, information and advocacy for company directors Australia-wide, with offices in each state to cater for over 24,000 members. AICD members work in diverse corporations such as small-to-medium enterprises, the Top 200 corporations, public sector organisations, not-for-profit companies, large private companies and smaller private family concerns.